Note 6 – Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) consists of foreign currency translation adjustments, cash flow hedges associated with the forecasted issuance of long-term debt, and changes in the net actuarial gains and losses associated with pension and other postretirement benefit plans. The following table summarizes the activity within the components of accumulated other comprehensive income.

Changes in accumulated other comprehensive income (loss) by component is shown on the following tables:


	Three Months Ended September 30, 2018 (1)
					Pension and
					Other
	Foreign		Cash Flow		Postretirement
In millions	Currency		Hedges		Benefits		Total
Balance, June 30, 2018	$	(155)	$	321	$	(25)	$	141
Other comprehensive loss:
Other comprehensive loss before reclassifications		(8)		—		—		(8)
Amounts reclassified from accumulated other comprehensive income (2)		—		(4)		—		(4)
Other comprehensive loss		(8)		(4)		—		(12)
Balance, September 30, 2018	$	(163)	$	317	$	(25)	$	129


	Three Months Ended September 30, 2017 (1)
					Pension and
					Other
	Foreign		Cash Flow		Postretirement
	Currency		Hedges		Benefits		Total
Balance, June 30, 2017	$	(129)	$	(4)	$	(173)	$	(306)
Other comprehensive income:
Other comprehensive income before reclassifications		8		—		—		8
Amounts reclassified from accumulated other comprehensive income (loss) (2)		—		—		151		151
Other comprehensive income		8		—		151		159
Balance, September 30, 2017	$	(121)	$	(4)	$	(22)	$	(147)


	Nine Months Ended September 30, 2018 (1)
					Pension and
					Other
	Foreign		Cash Flow		Postretirement
	Currency		Hedges		Benefits		Total
Balance, December 31, 2017	$	(129)	$	(15)	$	(21)	$	(165)
Reclassifications to retained earnings in accordance with ASU 2018-02 (3)		—		(3)		(4)		(7)
		(129)		(18)		(25)		(172)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassifications		(34)		344		—		310
Amounts reclassified from accumulated other comprehensive income (loss) (2)		—		(9)		—		(9)
Other comprehensive income (loss)		(34)		335		—		301
Balance, September 30, 2018	$	(163)	$	317	$	(25)	$	129


	Nine Months Ended September 30, 2017 (1)
					Pension and
					Other
	Foreign		Cash Flow		Postretirement
	Currency		Hedges		Benefits		Total
Balance, December 31, 2016	$	(127)	$	(5)	$	(173)	$	(305)
Other comprehensive income:
Other comprehensive income before reclassifications		6		—		—		6
Amounts reclassified from accumulated other comprehensive income (loss) (2)		—		1		151		152
Other comprehensive income		6		1		151		158
Balance, September 30, 2017	$	(121)	$	(4)	$	(22)	$	(147)

(1)

All amounts are net of tax.

(2)

The amounts reclassified from accumulated other comprehensive income for cash flow hedges are recorded within interest expense, net on the condensed consolidated statements of operations. The amounts reclassified from accumulated other comprehensive income for pension and other postretirement benefits are included in other expense on the condensed consolidated statements of operations.

(3)

See “Note 1 – Accounting Policies” to the condensed consolidated financial statements for additional information on the adoption of ASU 2018-02 during the first quarter of 2018.

Beginning in December 2017 and during the first quarter of 2018, the Company entered into several interest rate swap and treasury lock transactions to manage interest rate risk. These agreements were designated as cash flow hedges and were used to hedge the exposure to variability in future cash flows resulting from changes in interest rates related to the anticipated issuance of long-term debt in connection with the proposed acquisition of Aetna.

On March 9, 2018, the Company issued unsecured senior notes with an aggregate principal of $40.0 billion as discussed in “Note 4 – Borrowings and Credit Agreements” to the condensed consolidated financial statements. In connection with the issuance of the Notes, the Company terminated all outstanding cash flow hedges. In connection with the hedge transactions, the Company received a net amount of $446 million from the hedge counterparties upon termination, which was recorded as a deferred gain, net of tax, of $331 million in accumulated other comprehensive income (loss) and will be reclassified as a reduction of interest expense over the life of the underlying debt. The Company expects to reclassify approximately $18 million in gains associated with these cash flow hedges into earnings within the next 12 months.